Do you help friends or family who need money?

This has to be one of the most difficult financial situations through which to navigate. Important relationships are at stake and it seems to me that the most socially acceptable (and easiest) thing to do is to give if you have it. Money problems are one of our last cultural taboos and so anyone revealing theirs is already feeling vulnerable but it is very difficult to consider giving or lending money without wondering how they got into the bind in the first place.

About a year ago, an email request came from a member of our social group soliciting donations for another member of the group, I’ll call Sue, whose business had failed and who needed money for a certification program which would hopefully launch a new career. It sounded like a good cause and we were doing okay so we sent her a check for $100 which she did in fact use for that purpose and for which she was very appreciative. In a subsequent conversation with Sue she explained how she was very frugal and though she shops at Ann Taylor for her clothes, she was considering holding off on the purchase of a new car since her current 5 year old model wasn’t yet giving her any problems. Now I’m really working on my nonjudgement but considering that I shop at Goodwill and other second hand stores (with the occasional splurge at TJMaxx) and my well maintained 11 year old car suits me just fine, I’m no longer certain that the donation went to a good cause.

My mother, who’s never met a dollar she couldn’t spend (plus interest), occasionally hints that she needs a new couch or a new mattress. She has sufficient income, multiple vices and has spent beyond her means her entire adult life. She has often said how she feels that people with money should be generous and she knows that I have money saved. What she doesn’t know, and will never understand, is that if I spent money that way she did, I wouldn’t have any either. I just end up looking like the selfish daughter who won’t help her poor mother!

We’ve been invited to a party this month at a local club that will double as a fundraiser for another member of our social group. From the outside, her life looks quite comfortable. She lives alone in a much bigger home than I share with my wife. But in reality, I have no idea what kind of challenges she faces. Perhaps she has a medical crisis. Perhaps she has lost her job and had no emergency savings of any kind. We may never know. We’ll probably go to the party and we’ll no doubt give the requested donation. But will it really help? In the long run? Wouldn’t a gift of financial coaching, while socially unacceptable, be more useful?

I’d really love to hear how others handle these delicate situations without feeling like either a louse or a fool.

Photo credit: purchased from istockphoto.com

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Carol: Money is a loaded topic for many people. Giving (or loaning) money to family members is even more of a hot-button… at least in our household. This caused our first big money fight… since then, I could write volumes more about the same family member.

These days, the “Bank of Jeanine” has tighter lending practices and the latest loan came with the requirement that this family member had to first scale back (move to a less expensive and less ideal housing situation, etc.) before we were willing to help with the current crisis.

The only way to give money is to do just that – GIVE it. No strings, no regret, no judgement. My rule is that I will give to a friend/family member ONCE. Whatever the reason, IF I can afford to help, I will, but I let them know that I will NOT give money ever again for any reason.

Great question, Carol. I’ve “loaned” money to family, knowing full well that I’ll never see the money again. But there comes a point when you have to wonder if you’re being an enabler of their poor financial habits. It’s a hard bright line to draw.

Hm.. tough question. I guess I haven’t really encountered a situation where I worried about enabling bad financial habits – my relatives are all pretty frugal so any help we might offer would be for an emergency, or something that they wouldn’t do or buy but that we want them to have – so more gift than loan. I did once get into trouble loaning money to a high-school boyfriend, but I didn’t even think about enabling bad habits, at that stage – and really, he was living in a paycheck to paycheck (tips to tips, more like) situation that was very precarious, so it didn’t feel like he was being irresponsible. Even then, I didn’t ever give him money that I couldn’t afford to lose – which was good, in retrospect, because I never did get any of it back, and he owes me around $1000 (were I ever to see him again).

“Need” is a loaded word. I can tell you that before I asked my family and friends for money, I’d be out there busting my hump to get a second job and sell some of my stuff. We’d cancel our Netflix subscription and be a lot more careful with the grocery budget.

Frankly, I’d be ashamed to ask for money from my family and friends. The last time I had to ask my parents to help me, I’d just left my husband, had a 1-yr old child and no job. THAT is desperate. I know too many people who simply drift along, hoping that money will magically appear, then sigh to themselves about how hard life is. Whenever I delicately suggest ways that they could better their situation, they always agree that, yes, that is a good idea – and then do nothing.

If you want to attend this party, go ahead. Just know that in all likelihood, your money would be just as well spent if you handed it to a homeless guy on the street to go buy alcohol.

Thank you all for the great responses. It is really interesting to hear how others handle these issues. Nina, glad to read that “bank of Jeanine” has higher standards these days. Compassionate approach KellyB. I’m probably more like Kelly but feel like I should be more like you. Laura, maybe your family would adopt me? 🙂 My relatives and friends are definitely more like Serena’s and I’m sure I wouldn’t see and payback for quite some time if ever. I would gladly help someone that practiced sound financial management and met a truly unexpected emergency. These are just so rare.

In a subsequent conversation with Sue she explained how she was very frugal and though she shops at Ann Taylor for her clothes, she was considering holding off on the purchase of a new car since her current 5 year old model wasn’t yet giving her any problems. Now I’m really working on my nonjudgement but considering that I shop at Goodwill and other second hand stores (with the occasional splurge at TJMaxx) and my well maintained 11 year old car suits me just fine, I’m no longer certain that the donation went to a good cause.

This part of this post really rankled me. The cause is no less good just because she doesn’t live according to the same standards you do.

She needed help getting a certification after a devastating loss and you were nice enough to chip in. She didn’t use your money for false pretenses; she didn’t take it and say, ‘Screw the certification, I’m buying a new jacket.’

I understand not wanting to give money to someone who has a history of not being trustworthy (like spending her school money on clothes or drugs) or even someone who just wants to pay off their consumer debt, but only giving money to those who we feel do things the “right way”? I mean…it’s your dollar so, obviously, you can do as you wish with it, but the idea that you would hold out on a friend for the SOLE reason that when she finally gets a paycheck from her new job, she might by herself a couple of work shirts from Ann Taylor instead of the thrift shop? That’s beyond harsh.

I am fortunate enough that the vast majority of people in my life, friends and relatives, do not ask for or hint that they want/need money. There are a few family members that live in what I would consider poverty, and I help them in small ways, unasked, when I can (not having that much myself.) An in-law has heavily hinted that she needs money (tells us all about her car troubles/loan problems/mortgage woes and tells us about taking money from her divorced daughter with children who is trying to finish her education and her other, mentally handicapped daughter who lives on disability) but won’t come out and ask us b/c I’m pretty sure she’s pretty sure we’ll say no. Honestly, her blatant irresponsibility with money and her willingness to take it from her own struggling children peeves me, and I won’t support that kind of behavior by funding it even more.

@AnotherAnon: I think Carol is just being honest w/ the thoughts that were going through her mind as she talked to Sue. If I were to find out that someone I’d given money to on a need basis lived better than I did, I’d probably feel the same. But it is also important to consider other factors: ok, so she wears Ann Taylor, but how often does she actually buy new clothes? I mean, she could wear them out first…and a five year old car w/ no plans to buy a new one doesn’t sound bad to me (though I probably would have sold the car before getting a friend to send around emails asking for money if I’d been in her position!!)